The Greatest Comeback

PrintPrintEmailEmailI've always thought that one of the saddest words in the English language is has-been. While it has a modern ring—perhaps because the movies and television have produced so many stars who’ve enjoyed, in Andy Warhol’s famous phrase, 15 minutes of fame—the phrase actually was first recorded in 1606, when London’s Globe Theatre was the pinnacle of show business. Of course, there are has-beens to be found far from the stage. Wall Street is full of once red-hot stock analysts, and the history of literature is peculiarly rich in great first novels whose authors never wrote another book half so good. Corporations can be has-beens too, especially in new, quickly evolving industries. WordPerfect dominated the word-processing software market for a decade but is now far, far behind Microsoft’s Word.

Sometimes corporations that bestride their industries for decades stumble. Western Union was the most powerful company in the electronic communications market of the late nineteenth century. Today it is a very minor player indeed.

Sometimes, of course, has-beens surprise us with comebacks. One of the best of all Hollywood movies, Sunset Boulevard, starred, in her greatest role, a has-been actress named Gloria Swanson playing a has-been actress named Norma Desmond.

Corporations, too, can come back from the dead. Recently, the man who designed one of the greatest corporate comebacks in recent years published his memoirs. Louis V. Gerstner, Jr.’s Who Says Elephants Can’t Dance? is an instructive tale in how to rejuvenate a company. A legendary corporate success story (between 1939 and 1979 its stock rose 22,000 percent), IBM by the 1980s had become stultified, riddled with fiefdoms, and deeply resistant to changing its ways. The advent of the PC had altered everything in the computer market, and by the early 1990s the company was hemorrhaging money (it lost a staggering $16 billion in 1993), and the death of IBM was widely predicted.

By the time Gerstner retired in 2002, IBM’s corporate culture had been revived, its product line reborn, and its stock price had risen 1,000 percent. IBM is once more a leader in the computer market it did so much to create in the first place.

But perhaps the greatest turnaround in American corporate history was that of the Ford Motor Company in the 1940s. What is most interesting about it is that it was largely the work of a man who—unlike Gerstner, a seasoned executive—was only 28 years old when he took control of the company and had little on his résumé to recommend him besides his name: Henry Ford II.

The Ford Motor Company was founded exactly a century ago, a time when auto manufacturers were springing up like mushrooms (and usually disappearing nearly as quickly). Henry Ford had the idea of designing a car the average man could afford and to keep lowering manufacturing costs so as to be able to continually reduce the price and enlarge the market. This business plan made him one of the seminal figures of the twentieth century. (The zero year of the calendar in Huxley’s Brave New World, published in 1932, was what we know as 1863, the year of Henry Ford’s birth.)

Although Ford was a great mechanic and manufacturing innovator, he was not a great businessman. Far from it. Having devised his business plan and ridden it to one of the world’s major fortunes, he flatly refused to change it, even when the automobile market began changing rapidly. And because the Ford family owned 100 percent of the stock, no one could tell him what to do, including his own son, Edsel, who had been made president of the company in 1919.

Even the government got worried, and there was talk of putting the Ford Motor Company under Studebaker.

Even after the market had forced him to abandon the Model T in 1927, Ford, in his sixties, clung to the past and became more and more paranoid, seeing spies and enemies everywhere. He interfered constantly with his son’s attempts to make Ford into a modern automobile corporation like General Motors, which had surpassed Ford in the mid-1920s to become the largest in the world.

Meanwhile, Henry Ford became ever more dependent on a man named Harry Bennett, who ran under the innocuous name of the Service Department what was essentially an in-house security and intelligence operation. Bennett may have been the most Rasputin-like figure in the history of American business. He was the power behind the throne who nearly destroyed everything.

About the same age as Edsel, he had come from a poor background, joined the Navy in World War I, and became both a deep-sea diver and a boxer. Hired by Ford after the war, he called attention to himself with his pugnacity and, having a gift for politics, he soon rose to power as Henry Ford’s eyes, ears, and, when necessary, fists and guns. He had many executives routinely followed to see where they went and whom they saw. In one labor dispute he saved his own life only by pulling a man on top of himself; the man was killed in the fracas. Ford gave Bennett a Lincoln as a reward for bravery.